Introduction to Hulamin

Transcription

1 Introduction to Hulamin

2 Topics covered in this presentation 1. The history of Hulamin 2. Industry overview and Hulamin s position in the value chain 3. Hulamin s growth and the factors underpinning it 4. Earnings volatility 5. The current expansion project 6. Aspects of Hulamin s funding 7. The Hulamin BEE transaction

3 Milestones in Hulamin s history 1949 Plant established by Alcan in Pietermaritzburg 1969 Listed on the JSE as Alcan SA 1974 Hulett Corporation acquires control of Alcan SA and changes its name to Huletts Aluminium Huletts and Tongaat merge forming The Tongaat-Hulett Group. Hulett Aluminium listing terminates 1986 Hulett Aluminium becomes wholly owned by THG 1996 IDC and Anglo acquire 30% and 20% respectively of Hulett Aluminium ahead of R2.4 billion expansion 2006 Decision announced to list Hulett Aluminium and unbundle THG shareholding R950 million expansion approved BEE transaction agreed in principle 2007 Name changed to Hulamin Ltd Hulamin to list on JSE on 25 June

4 Change in shareholding pre- and post listing Pre-2007 listing Post-2007 listing Tongaat Hulett 50% IDC 30% 26% Anglo American 20% 38% BEE Shareholding 10% Employees 5% Other 21%

5 Aluminium Industry Value Chain

6 Global aluminium semi-fabrication sales 2006: 39.7 million tons Castings Ref: CRU Analysis

7 Hulamin Financial Segmental Analysis 2006 Rolled Products Turnover (R million) PBIT (R million) Assets (R million) Extrusions Commercial Products Total

8 Growth in Rolled Products sales volumes

9 Growth in Operating Earnings 2004 R148 million 2005 R319 million 2006 R422 million Further growth expected from existing facilities through increasing volumes and improving mix R950 million expansion project in progress with returns exceeding 20%

10 Hulamin s proven growth strategy is based on: Operating in an industry dominated by a few major producers Having competitive advantages over current global competitors in respect of capacity utilisation, sales mix and operating costs Being strategically well positioned in a region where there is an excess of primary metal Having depth in management and technical skills (and investing further)

11 Concentration of ownership in rolled products

12 The product profitability curve

13 Examples of higher value products Heat treated plate Brazing sheet Thin gauge foil Can end stock

14 Improvement in the sales mix

15 Cost competitiveness

16 Opportunities for beneficiation in SA Regional primary metal production ( 000 tons per annum) Existing smelters 1400 Coega 720 Potential beneficiation 2120 Regional consumption Consumption for local end use 130 Consumption for export 160 Unbeneficiated export of primary metal 1110 Total 1400

17 Depth in management and skills Executive team average 20 years experience in the industry 52% of management is from previously disadvantaged groups Investment in training is approximately double the national average

18 Earnings growth and volatility R/$ Rolled Products volume ( 000 tons) EBITDA excl. metal price lag (Rm) Metal price lag (Rm) EBITDA (Rm) Depreciation (Rm) EBIT (Rm)

19 Earning growth and volatility Currency sensitivity A movement of 10c in the R/$ exchange rate has an approximate effect of R20 million on annual EBIT Metal price lag effects Expected to be less volatile in future Breakeven sensitivity More than 70% of costs are fixed (vs. volume) The breakeven volume of Rolled Products sales at current exchange rates is approximately tons The breakeven exchange rate at current volumes is approximately R5.00 and is expected to reduce to R4.50 at tons

20 Expansion Project Increase rolled products capacity from tons to tons per annum Improved mix and reduced unit costs Capex timing Rm TOTAL 950 R400m committed to date Full benefits by 2011

21 Funding considerations 2006 finance costs included charges of R155m relating to a loan that has been converted to equity Improved inventory cycle expected to result in maintenance of current inventory levels The current expansion project is being funded largely out of operating cash flows Borrowings to approximate current levels until project completion

22 Hulamin BEE structure

23 The Hulamin BEE transaction 15% equity participation Complements Hulamin s impressive BBBEE credentials in respect of other BEE criteria such a preferential procurement, employment equity etc. Includes employees, broad based groupings and strategic partners IFRS2 cost of approximately R160 million in 2007 and R10m per annum for the following four years Fair and reasonable opinion

24 Conclusions Hulamin has an attractive business model We are competitive in local and international markets There are opportunities for expansion both from existing facilities and from incremental investment We are at the forefront of transformation and have the skills and capability to maintain our growth momentum We have progressed through an extraordinary growth phase and have created a platform for sustained growth ahead